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The Pensions Increase (Review) Order 2025

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Pension increase: annual rate and lump sums

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3.—(1) This article applies to an official pension if—

(a)a qualifying condition is satisfied; or

(b)the pension is—

(i)a derivative pension;

(ii)a substituted pension; or

(iii)a relevant injury pension.

(2) In relation to any period on or after 7th April 2025, the pension authority may increase the annual rate(1) of the pension—

(a)for a pension which began before 8th April 2024, by 1.7 per cent;

(b)for a pension which began on or after 8th April 2024, by 1.7 per cent multiplied by—

Formula

where A is the number of complete months in the period between the beginning date(2) of the pension and 7th April 2025.

(3) In relation to a lump sum(3) which is payable on or after 8th April 2024 but before 7th April 2025, the pension authority may increase the lump sum by 1.7 per cent multiplied by—

Formula

where A is the number of complete months(4) in the period between the beginning date of the lump sum (or, if later, 8th April 2024) and the date on which it becomes payable.

(1)

Section 59(5) of the Social Security Pensions Act 1975 provides that increases in the rate of a pension are to be calculated by reference to the basic rate of the pension as authorised to be increased by section 1 of the Pensions (Increase) Act 1971 or by an order under section 2 of that Act or section 59 of the Social Security Pensions Act 1975.

(2)

Section 8(2) of the Pensions (Increase) Act 1971 sets out the day on which a pension is deemed to begin for this purpose.

(3)

By virtue of section 59(7) of the Social Security Pensions Act 1975, “lump sum” includes an instalment of a lump sum.

(4)

By virtue of section 59(8) of the Social Security Pensions Act 1975, where is it necessary to calculate the number of complete months in any period, an incomplete month shall be treated as a complete month if it consists of at least 16 days.

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